Commodities prices are expected to show strength in the first few months of this year. The strength will not be one-way,
however. Periods of profit taking should be expected at times.

This week petroleum prices may back off, following strong increases in recent weeks. Gold and silver prices may show continued strength this week, in contrast, as investors continue to buy these metals in expectation of higher prices over the next few months.

Economic conditions continue to drive much of investor interest in commodities, including other, industrial metals. With increasing indications that the U.S. economy is joining other geographical markets in moving toward recovery and revival, investors are buying a range of commodities, expecting upward pressure on prices. Industrial demand is showing signs of increasing, meanwhile, adding to the upward pressure.

In many markets the supply side remains constrained by recent economic and financial stringencies. This is adding to the upward strength in prices in and of itself, but it also is helping stimulate investment demand. Prices should not be expected to rise without period bouts of profit-taking, but at present there is a great deal of upward momentum in commodities prices.

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